If you want to be successful in fraud and corruption, South Africa seems to be the perfect university for the eager pupil.

 

April Fool jokes aside, the hard-ribbed reality is that corruption, like crime, pays. It is the reason the Mafia have lasted where governments have failed. It’s what keeps the courts and jails filled. Whenever the temptation factor is high, corruption will follow.

 

The Old English word for best derives from the superlative of its root word, meaning remedy or reparation. For many the best remedy for their own greed is to steal, lie, and cheat. The best way to promotion, it seems, is through corruption and not hard work or strong ethics.

Training and resources remain a challenge according to KPMG International survey.

 

According to the 2013 KPMG Cross-Border Investigations survey of sixty global executives, ninety percent indicated that the number of cross-border investigations have either increased or remained the same over the last year. Yet over fifty percent of these executives also reported that they have limited protocols in place and have insufficient resources to conduct cross-border investigations. As global regulations, laws, and enforcement actions increase, companies with well designed cross-border investigation protocols will be positioned for more positive outcomes than those that are not prepared.

 

“Conducting cross-border investigations is no simple endeavour,” said Phil Ostwalt, Global Coordinator for Investigations for the Global Forensic practice at KPMG and Investigations leader in the United States. “Add the complexities of legal and cultural differences and you have one of the biggest challenges facing global corporations.”

 

Only thirty five percent of respondents in KPMG’s survey indicated that their companies conduct cross-border investigation training each year, a vast decline from KPMG’s 2007 survey when that figure was eighty percent. And forty two percent of the executives believe their companies lack sufficient resources to handle cross-border investigations.

Corporate crime is the scourge of business in South Africa and it’s getting worse. PricewaterhouseCoopers released its annual Global Economic Crime Survey to the media this week.

 

It exposed the shocking prevalence of economic crime, stating the companies here at home are hit by more fraud, bribery and corruption than their global counterparts. Since 2011, the report states, the percentages have climbed.

 

It’s a bitter blow for ethics and integrity in local business and intensifies the challenge facing business leaders in South Africa today.

 

Profiling the enemy within

The survey also reveals a profile of the typical fraudster lurking in senior and middle management. He is usually male, between the ages of 30 and 40, university educated and has been with an organisation for a long time. This fraudster, it says, commits more than 70 percent of all internal fraud.

 

This a frightening barometer of the climate of corruption in business. The survey reveals that SA organisations took no legal action in almost 10 percent of cases, opted for transfers in two percent and issued warnings in just less than 20 percent of the cases. This, to me, shows either a lack of vigilance or a fatal complacency or acceptance of the current status quo.

Rooting out “career criminals” is taking on a whole new meaning with more and more businesses now resorting to polygraph testing to get to the bottom of workplace crime as well as to identify would-be trouble makers before they are even hired.

 

Willem Marshall, a polygraphist with leading national  private investigation agency, Justicia Investigations, warns that far too many employers are naïve enough to believe that theft, fraud and corruption will never surface in their companies. “People need to realise that there is more and more organised crime out there and that they are being targeted.

CEOs in Africa are optimistic about opportunities for business growth on the continent and expect their operations to grow within the next 12 months despite the recent economic uncertainty, according to the findings of a report released by Professional Services Firm PwC.

The vast majority of CEOs in Africa (95%) are confident long-term about growing their businesses on the continent in the next three years. The Africa Business Agenda provides boardroom insight into Africa's operating environment and draws upon the perspectives of hundreds of top business and government leaders. Overall, The Agenda shows that optimism about Africa's growth trajectory is well-founded in fact and experience.

Suresh Kana, Territory Senior Partner for PwC Africa and CEO of PwC Southern Africa, says: "The Agenda shows that growth opportunities in Africa are abundant and this is leading to unprecedented levels of confidence from CEOs."

Even though the economic climate remains challenging, CEOs in Africa are more upbeat about prospects for economic growth than their international counterparts. Almost all of the CEOs in Africa expect their business to grow in the next 12 months, whereas PwC's Global CEO Survey is showing us that only 75% of global business leaders expect their organisations to do the same. The optimism among African CEO's is being fuelled by the current and anticipated growth prevalent across all markets, industries and geographic regions, which are being experienced across the continent.

Kana says it is also encouraging to note that confidence among South African CEOs remains positive. In the mid- term South African CEOs are as confident about growth as CEOs in the emerging economies, believing that it will gain momentum in the next three years.

The Agenda is based on a survey of 201 CEOs in Angola, Ghana, Kenya, Mauritius, Nigeria, Rwanda, South Africa, Tanzania, Uganda and Zambia. The survey was augmented by in-depth interviews and discussions with CEOs in April and May 2012. The study shows that the top priorities for CEOs in Africa are talent management, the risks of doing business on the continent and strategies that CEOs plan to implement in order to change their businesses.

Where is growth?

In Africa, the environment is constantly changing and the growth opportunities are unparalleled. A high percentage of CEOs (79%) in Africa plan to change their business strategies over the next 12 months, compared with a significant 88% of South African CEOs who anticipate changing their companies' strategy in the next 12 months, and the global average of 70%. The reasons they give for changing their business strategies are closely aligned to the challenges they currently face. These include the recent economic uncertainty, competition, risk, talent and the evolving regulatory environment.

African CEOs say the best strategic growth opportunities in the next 12 months will come from new products or service developments (27%); an increased share in existing markets (27%); new geographic markets (24%); new joint ventures or strategic alliances (13%); and mergers and acquisitions (7%).

At the same time, priorities such as technological investment, research and development and innovation capacity, organisational structure and capital investment decisions feature at the top of their strategy agendas.

Kana says that the emerging markets remain a vital growth opportunity for CEOs. "Foreign investors are looking at South Africa and Africa with keen interest for growth opportunities."

Main risks to doing business in Africa

The majority of CEOs in Africa (79%) are concerned about economic risks and it is considered the major driving force for changing 62% of CEO's business strategies.

CEOs are also concerned about other policy risks such as uncertain or volatile economic growth, fluctuations in the exchange rates, inflation and over-regulation. Other challenges, which include the availability of key skills, energy costs and an increasing tax burden, are also worrisome.

Kana says that CEOs in South Africa share many of the same concerns as their counterparts on the continent, with the report showing that there is uncertainty about economic growth, instability in the capital markets and in increase in debt.

Bribery and corruption are considered a major risk to economic growth by 69% of African CEOs and 66% of South African CEOs. Many CEOs believe that corruption is an outcome of poor governance.

Managing risk is just one of many responsibilities for CEOs in Africa, but more than half of them (54%) wish they had more time to spend on it. A significant percentage of CEOs (81%) anticipate changes to their approach in managing risk this year. "This could be an indication that business risks have a complex and expensive effect on business operations," says Kana.

The skills challenge

The availability of key skills stands out as a key concern for CEOs both in Africa and South Africa. "An inability to find and keep the right people is a massive issue, with CEOs saying that the lack of talent is stifling expansion within their organisations," Kana says. He says that the competition for talent is increasing significantly as recruitment activity picks up in some sectors and there are difficulties in finding staff with the right skills and experience.

On a daily basis, many CEOs are making time for the development of talent and 74% wish they had greater capacity to develop leadership and their talent pipeline. An overwhelming majority of CEOs in Africa (87%) plan to make direct investments in workforce development this year. Businesses are making these investments to help cultivate a future supply of potential employees and to improve overall working and living conditions where they operate, states the report.

CEOs are also increasingly finding it difficult to hire workers within their industry, with high-potential middle managers and senior managers being the two most difficult groups of employees to recruit and retain. At the same time, the need for high-potential managers has placed a premium on their worth. Over half of CEOs in Africa (54%) say that talent-related expenses rose more than expected over the last 12 months and many complain anecdotally about poaching and poorly-trained and inexperienced managers.

Tom Winterboer Financial Services Leader for PwC Southern Africa and Africa, says: "African and South African CEOs have built on the experience of the past few years and are better prepared to deal with the host of challenges and uncertainties. CEOs have and also continue to reshape their business strategies to take advantage of new opportunities for growth, both in existing and new markets."

Part of the reason I am dedicated to producing technology that simplifies financial management and forecasting is because I enjoy order and structure. I am drawn to the unspoken rules, boundaries and balance of accounting, budgeting and corporate governance. Having said that, I cannot find fault with the laws, codes and guidelines that our government has put into place to enforce compliance with what must be the highest global ethical standards.